Everyone running a business of any kind is familiar with the concept of a target market. But very few people know the difference between horizontal markets and vertical markets. To understand your target audience correctly, you need to understand the different types of markets to deal with them accordingly.
This post will be about vertical marketing and the means of entering a vertical market. But before that, let’s define this term the way it needs to be understood.
What is a Vertical Market?
Vertical markets are defined as potential customers targeted corporate clients that belong to a specific industry. Unlike horizontal markets, which include individuals or businesses from various sectors, vertical markets consist of narrow industry groups. A good example is a market for MRI scanners. MRI scanners are primarily sold to hospitals.
The products and services sold in vertical markets are meant to cater to the specific customer needs of the industry or sector that they serve. In other words, vertical marketers produce goods and services that serve a narrowed-down, designated niche of business clients or end consumers. At times, this niche group of customers may comprise a predefined set of customer demographics instead of a specific industry. For example, the market for cat food serves a particular demographic of the population, that is, people who have pet cats.
What is Vertical Marketing?
It is relatively easier to do marketing for vendors in vertical markets, and the process is called vertical marketing. Vertical marketing can be done in a less complex manner than horizontal marketing. This is because, as a vertical marketer, you always know exactly who your targeted and ideal customers are and what they basically need. You can create simplified advertisements and produce other straightforward marketing content to attract them to your business. You only need to show your business strength and do not necessarily need to focus on your unique selling points in your marketing messages. As long as you are the first to approach your potential customers and provide them with what they are generally looking for, you can close the deal.
In other words, the process of vertical marketing is a lot more streamlined than horizontal marketing. Messages and posts related to vertical markets spread quickly through social media and word of mouth.
Benefits of Entering a Vertical Market
No matter what your previous perception has been, you cannot make everyone your customer because you need to target a specific niche to successfully run a business. Companies with the most tremendous success start with defining their niche and creating marketing messages for their specific target audience. For example, providing a communication tool or service might seem like targeting a general enough audience, but realistically it is not. Companies that offer communication services cater to niche sectors such as energy, finance, education, and healthcare. A hospital would instead purchase communication services from a firm that has expertise in the common communication-related problems faced by the healthcare sector. The hospital would not prefer getting communication services from just any company that generalizes in telecom (unless, of course, it’s a monopoly).
There are many different types of vertical markets. Some are retail or education, while others are in the legal and healthcare sectors. They each have different vertical market characteristics. For entering a vertical market, you need to cater to the specific elements that the industry has. Let’s look at some of the benefits of entering a vertical market.
1. You Can Create More Concise Marketing Messages
As mentioned above, vertical marketing does not require you to build comprehensive service packages or write detailed copy pages to convince your customers about your products or services. You can build simplified forms of marketing content and conduct simple outreach activities. You can even send out concise messages just to inform your audience that you exist, along with a brief about the services you offer.
Since vertical markets are made of specific demographics of people or specific sectors of the economy, it is easier to do market research and learn about their pain points. So instead of trying to learn everything about everyone, you can focus on learning about a specified group of people and develop strategies to target them effectively.
3. It is Easier to Monopolize in Vertical Markets
Since vertical markets are narrow groups of customers or companies, there will always be just a few players in a niche you select. For example, suppose you offer mobile communication services to a targeted niche. In that case, you will only face competition from a couple of other service providers targeting the exact same niche as yours. Hence, it is relatively easier to gain market share and even monopolize your business in vertical markets.
4. You Can Build the Reputation of Being a Trusted Advisor
Doing thorough research about a particular niche can make you an expert in that sector. This can help you establish yourself as an authority within your niche. People are more comfortable buying from brands or companies with a good reputation and can be trusted. As you immerse yourself in your selected vertical market, the people in the market will find you more trustworthy and credible than others. Vertical marketers usually enjoy the reputation of being trusted advisors. This can help you become a dominant provider in your selected vertical market.
We have broken down the steps for you that companies usually take for entering a vertical market.
1. Select a Target Vertical Market
Choosing your target vertical market is not a complicated process. Here are a few steps you can follow.
Profile any existing customer base you have.
Look for the current trends among your existing customers.
Read and learn about the industry trends within the new vertical markets you consider entering.
Build a simple spreadsheet with a column for each potential sector, estimated revenue numbers, and appropriate solutions that you plan to offer.
Choose the most viable vertical market option.
2. Create a Client Profile
The next step for entering a vertical market is to create a profile for your target client. What do your potential clients have in common? What problems do they face? How can you solve them? Observe your existing clients in the vertical market and build a client persona. Once you have that, you are ready to approach those who fit your client profile criteria.
This profile will also be the basis for developing your marketing and sales strategies and providing service training for your employees. If you are just starting off and do not have any existing clients yet, you can start by online research or looking into industry publications. You can also attend live events and find a company focused on your selected niche in another vertical market that makes it a direct competitor to you.
3. Estimate Localized Market Value
Once you have selected your target vertical market and built your client profile, you need to explore the potential of your local market. Getting localized information will give you the basis for deciding whether this is really a good opportunity for your business or not. The research does not have to be too time-consuming or costly. Doing simple online searches and attending several conferences about your vertical market can do a great job. You just have to make sure you are professional networking with the leading providers in the relevant vertical space. The point is to understand what they do that gets them ahead in the competition. Every contact you make could turn into a business opportunity for you, if not directly, then through business referrals.
4. Commit to the Vertical Market
Committing to your chosen vertical market means more than just preparing a business plan. Your entire organization needs to get focused on dominating the market. Explore the industry's culture and learn about the different roles you can play within a typical client’s business. Studies the workflow and procedures that work in that industry for generating revenue.
5. Market Your Business
The last step for entering a vertical market is to promote your business in the selected industry. You can do this in several ways.
∙ Identify Industry Influencers
Social media influencers play an important role in promoting pretty much any kind of business these days. Identify the key influencers in the industry, and work out an agreement with them, so they become willing to promote your company to their followers.
∙ Create a Professional Website
Select a suitable website builder and create a professional website to showcase your business. Strikingly is a growing platform among the website building community that regularly updates its features and tools. Our goal at Strikingly is to make creating and maintaining websites more streamlined for individuals and organizations.
If you want to become a part of our community and use your Strikingly website to promote your business to a new vertical market, you can sign up for an account with us on our landing page today. It’s completely free of cost!